When looking for new prospects, it’s easy to forget about the customers already in your sales funnel.
But the question is, why should you care about your existing customers?
Re-engaging with your marketing list isn’t only a cost-effective strategy, but it can also give your business a real boost. This works so well because customers already know and trust you.
Cross-selling and upselling are two different sales techniques applied (mostly) to existing customers with one obvious benefit: more revenue. They increase an order’s size (up) or sell someone additional items (cross) while complementing each other.
Cross-selling vs. upselling: understanding each in context
Suppose a customer wants to buy a car from you. If you offer them an upgraded model for more money, it’s an upsell. If you offer them car insurance, too, it’s a cross-sell.
Cross-selling can boost sales by 20% and profits by 30%. Moreover, personalized cross-selling accounts for 26% of income, despite only 7% of website visits.
Speaking of upselling: 60-70% of sales are made to existing customers. In comparison, the likelihood of selling to a fresh prospect is only 5-20%.
What is upselling?
Upselling means selling to your existing customers and getting them to buy more. Additionally, it’s a practice to convince customers to buy more expensive products related to the ones they originally intended to buy.
Usually, the final sale is:
- A product’s upgraded model
- Same product with add-on features and value quotient
Upselling is one of the smartest ways to sell more. In e-commerce, upselling is a better practice to increase revenue.
You can encourage customers to purchase more expensive products while browsing your store or buying other products. Typically, retailers upsell by displaying higher-value products next to what they’re buying.
What is cross-selling?
Cross-selling is a sales technique that encourages existing customers to buy additional products. It’s often used at checkout, allowing customers to purchase accessories, related products, or extended warranty coverage.
Suppose you want to sell someone garbage disposal. You can offer a service to install it or some kitchen appliances compatible with the garbage disposal.
With a solid customer base, it’s worthwhile to cross-sell products that complement the main product they already use. This is a natural progression from upselling. However, instead of selling an expensive product, you sell a different but related one from the same range.
Benefits of cross-selling and upselling
Cross-selling and upselling are simple ways to convert your cold traffic and generate more revenue. A solid cross-selling and upselling strategy helps retain customers and reduces your business’ churn rate.
Below are five reasons why both strategies work every time.
1. Improve customer retention
Marketers sometimes prefer to keep their existing customers than attract new ones.
Loyal customers should be your priority. After all, they’re the ones already happy with your customer service and not looking for a better deal. They like how your brand consistently meets their expectations. Either way, if you can retain customers, it’s more cost-effective than acquiring new ones looking for the cheapest option.
Upselling and cross-selling strengthen customer relationships. You need to show your customers that you’re not out to take their money and run, but you care about their interests.
For example, if you’re selling a bicycle, your customers will appreciate your effort if you offer them a helmet and other cycling gear. This is how retention marketing works.
2. Increase the average customer lifetime value (CLV)
Upselling and cross-selling strategies increase sales and contribute to customer lifetime value (CLV).
By leveraging personalized, cross-channel experiences based on an individual customer’s actions, you can substantially increase your average CLV without offending your existing or potential customers.
3. Generate a return on investment (ROI)
In any industry, upselling and cross-selling are indispensable means to achieve a higher ROI for businesses. Here are some ways you can get the maximum attention from your customers:
- Consumer testimonials: Add a consumer testimonial to convince your customers of the other buyers’ firsthand experiences. People trust honest opinions from fellow consumers even more than the brand messaging.
- Loyalty points: Introducing loyalty points connects customers with brands more meaningfully. It makes them feel special and part of a community. They’re rewarded for buying from you, compelling them to buy from you again.
- Consumer recognition: Brand mentions are the best way to connect directly with customers, build brand loyalty, and increase sales. By including a gift or special offer, you can increase the chance of more sales.
- Product ratings: Online shoppers first check product ratings and customer reviews before making a purchase.
- Call-to-action: A call-to-action persuades potential customers to take the necessary action and helps them purchase via buttons, links, or clickable images.
4. Balance growth between new and existing customers
Cross-selling and upselling are essential for business success. Enthusiastic customers can provide valuable references and support and help acquire new customers. These relationships create an upward spiral in which new and existing customers help each other and grow into larger client pools.
5. Enhance customer experience
The right cross-sell or upsell strategy helps customers make purchasing decisions faster. For example, if your customers buy clothes online, you can offer shoes or jewelry.
However, don’t force customers to buy; instead, give them more options of what they might want to purchase and provide them with a seamless customer experience.
6 best practices for cross-selling and upselling
Why are some companies so good at up- and cross-selling and others not? Let’s find out with these six best practices.
1. Figure out how to sell
It’s sometimes difficult to know when and where to sell. This is because your customers rely on their internal motivation when making purchasing decisions. They don’t want you to force this decision on them.
So when should you recommend a related product to a customer? Should you do it before, during, or after purchase?
There’s a lot that goes into answering this question. It depends on the purchasing process, type of customer account, available customer information, and their stage in the sales funnel.
Upselling works better than cross-selling. This is because once a customer decides to purchase a product or service – especially if it’s a bigger ticket item – they may not want to be distracted by another product or service.
However, cross-selling is sometimes the best way to sell. For example, when someone buys shampoo, it’s an excellent opportunity to have them choose conditioners, frizz control products, curl-enhancing sprays, and so on, and offer them more buying options for a fulfilling and delightful purchase.
2. Don’t overwhelm your customers
As you up- or cross-sell, keep your offers relevant to what they’ve already bought. This way, you avoid frustrating customers and lost business opportunities.
For example, when checking out an Amazon order, right after you confirm your payment information, Amazon automatically suggests related products. Similarly, the hotel you frequently stay at offers a discount on your next visit if you book another hotel for the coming weekend.
That’s how smart marketers do business!
3. Look for patterns in your past buyers
Look for patterns in your previous buyers to capitalize on as you approach new prospects.
- What buyers do you already have?
- Where do they come from?
- What else can you do to acquire more such buyers?
- Who are your biggest competitors?
- How can you beat them?
Decoding customer journey analytics is a common way to increase conversion rates and profits – something most successful brands do.
Let’s say you sell beauty products. After a customer buys your shampoo or conditioner, find out how long it takes for them to come back and buy the same product. You can come up with offers to convince them to buy from you again based on this journey.
4. Launch loyalty programs
If you gear your sales process toward delivering customer rewards, you probably wouldn’t see the need to remodel. You may be doing better than most of your competitors. However, if you don’t usually offer your customers perks to purchasing your product, you’re missing out on an opportunity to build customer loyalty.
Unfortunately, there is no one-size-fits-all reward-based loyalty program. It all depends on your customer’s buying behavior. The first step should be to look closely at what people buy and why.
The more they purchase, the more rewards you should give them. Train your sales reps to use loyalty offers for their upselling and cross-selling efforts effectively.
5. Pay attention to shopping carts, especially abandoned ones
The key to reducing cart abandonment is convincing customers they’re almost ready to complete an order. People who’re confident they’re close to purchasing are much more likely to complete the checkout process.
Also, don’t be afraid to show customers what’s missing in their cart. Many products not relevant to what the customers originally visited to purchase can distract prospective customers.
You can evaluate abandoned checkouts using methods such as exporting Shopify data and reminding customers what they initially came for. This can persuade them to make a purchase after all.
6. Don’t forget to follow up
Improving your follow-up process is another way to maximize customer lifetime value. For example, if someone just bought a new car from you, chances are they’re looking to purchase a home or life insurance soon.
Consumers with a new checking or savings account might consider investments, IRA accounts, and other financial products. These cross-selling and upselling opportunities bring huge profits because you already know what customers want to buy. All you have to do is ask.
Examples of cross-selling and upselling
If you ever find yourself in a situation of choosing between upselling and cross-selling, here are some examples to help you make the best decision.
Cross-selling can be observed in an everyday sales scenario. Here are some of the most common cross-selling examples.
The “frequently bought together” section
Encourage customers to add more products to their orders. Amazon, for example, offers a range of products often purchased with the selected item.
Giving customers multiple buying methods increases sales and improves your brand value. You can achieve this by splitting your shopping cart page layout into two to three parts and filling them with your most popular products and recommended products combinations.
When you cross-sell, you need to show how customers benefit from the purchase. But, if you force them to buy another product than they want, you likely lose their trust. So it’s better to offer your customers trial products with their order.
What comes after customers buy a product? Most likely an additional purchase.
For example, if you sell cameras, what else would you recommend to the customer after purchasing to enhance their experience? It could be batteries, tripods, card readers, and other accessories.
Promote what other customers bought
Another way to get customers to purchase multiple items is to offer recommendations based on what other customers usually buy. Checkout pages are particularly effective in promoting this strategy.
For example, you have a bike accessories store. You can create a promotion on the checkout page focusing on accessories that other customers who bought the same bike also purchased.
Upselling isn’t typical, and businesses need to put extra effort to upsell. Here are some useful upselling examples.
When purchasing online, users often hit a wall at the checkout page only to find the outrageous shipping costs. If they can’t afford high shipping costs or are unwilling to pay for them, they usually abandon the cart and leave the website.
You can leverage an upsell opportunity here by offering free shipping for orders over a certain amount (for example, $75). If the user doesn’t spend $75, they see $10+ of shipping and feel obliged to pay more.
Domino’s Pizza is a great example of an upsell concept. Domino’s doesn’t waste time! It goes over and above expectations and keeps rolling out rewards to enable customers to buy more from them.
Customers who usually order a medium-sized pizza and a drink might order large pizzas and desserts just to earn free points.
Recommend the most valuable package
The VIP plan inevitably draws more users as it offers the most value. Recommending this package helps you upsell instead of just selling.
You can subtly influence the user’s attention and help them choose something they usually skip. It’s a bold move, but it’s a risk worth taking. Your goal is to get your customers to check out your premium options and help them decide whether it’s worth buying.
Deals of the day
The deal of the day also enhances your credibility. It may be the psychological effect of scarcity or just more fun to come back the next day or week to check out the new deal. Whatever the reason, daily deals are a powerful tool for increasing conversion rates.
When creating daily deals, keep an eye out for the products that fly off your shelves and promote them. For example, if you notice that your sweater sales are growing, feature your best sweaters.
Again, if last summer’s soccer gear didn’t sell well, feature different products this summer.
When done right, upselling and cross-selling are powerful strategies
Today’s customers have an awful lot of options for spending their time and money. The market is fiercely competitive. Your customers need to know you’re providing them a great experience to keep coming back. The only way to succeed is to get these sales techniques right and not overdo them.
Whether you’re cross-selling or up-selling, the first thing you need is a solid sales strategy to get more sales and boost revenue.